Creative Destruction and Copyright

One of the recurring internecine debates in the world of libertarian tech policy is over the philosophical status of copyright. On one side, you’ve got the camp that regards copyright as no different from any other kind of property right. People in this category tend to regard peer-to-peer file sharing as simple theft, and they often support draconian measures to ensure peoples’ “property rights” are protected, just as we would do if there were a rash of burglaries. On the other side, you have libertarians who regard copyright as a limited government monopoly that’s been granted for the pragmatic purpose of encouraging innovation. Folks in this camp tend not to think that copyright deserves the same level of strong enforcement we give to tangible property rights, and they tend to be more ambivalent about file sharing. You’ll often hear people in this latter camp talk about the need for copyright industries to find new business models that will be more resilient in the face of competition from peer-to-peer networks.

During his time at the Progress and Freedom Foundation, Jim DeLong was probably the most prolific advocate of the “copyright as property rights” theory. He hasn’t been as active in copyright debates the last couple of years, but he’s back with a long article about the fate of the newspaper industry. In it, he warns that unless newspapers can establish “a property rights–based monetization model, based on subscribers or control of advertising or both,” the newspaper industry will become trapped in a “‘tragedy of the commons’ situation” followed by “both individual and collective death spirals.”
What I find fascinating about this is that unlike most other industries, the newspapers don’t have a piracy problem. The recording industry’s problems are at least partly attributable to BitTorrent. But this is clearly not what’s killing the New York Times. People don’t go to peer-to-peer networks for illicit copies of today’s news. To the contrary, virtually everyone involved in the news business has followed copyright to the letter. News organizations may not like Google News, but their actions are likely fair use, and Google honors news organizations’ requests to be taken out of the index. Bloggers’ linking to and quoting from news organizations is indisputably fair use, and it’s hard to imagine news organizations—which derive revenue from advertising—want bloggers to stop linking to their stories.

DeLong asserts, without evidence, that “the Internet community seems unaware of the extent of its own dependence on the newspapers for raw material.” This is simply nonsense. I just skimmed the front page of Google News, and among the non-newspaper sources I saw were the BBC, CNN, CNet, Al Jazeera, MSNBC, ABC, Ars Technica, TheStreet.com, US News and World Report, Forbes, Chicago Public Radio, the Washington Independent, Slate, and Bloomberg. There’s no particular connection between owning a printing press and employing competent journalists. Many other kinds of organizations can and do employ journalists, with a variety of different business models.

In short, the newspaper industry is in the same death spiral as the recording industry, without the lawbreaking that’s commonly blamed for the recording industry’s troubles. And it seems to me that this poses a philosophical challenge to DeLong’s theory that the problem is a lack of respect for “property rights.” The decline of the newspapers is clearly a story of technological progress producing increased competition and entrepreneurship—precisely the sort of thing libertarians normally celebrate. The news business has gotten far more competitive over the last decade, and we’re now seeing a normal shake-out where the least efficient firms go out of business.

I think the fact that this is happening in an industry without a piracy problem should give us second thoughts about blaming the decline of other copyright industries on BitTorrent. The newspaper example suggests that even if we could completely shut down peer-to-peer networks, we should still expect the recording industry to decline over time as consumers gravitate toward more efficient and convenient sources of music. Piracy obviously accelerates the process, but the underlying problem is simply this: the recording industry’s core competence, pressing 1s and 0s on plastic disks and shipping them to retail stores, is rapidly becoming pointless, just as the newspaper industry’s core competence of pressing ink on newsprint and dropping them on doorsteps is becoming obsolete. Not surprisingly, when a technology becomes obsolete, firms who specialize in exploiting that technology go out of business. This is sad for the employees and shareholders of those firms. But it isn’t a problem for the broader society, and it certainly shouldn’t be of special concern for those of us who support markets and property rights.